Question

Suppose you borrow $200 from a payday lender for one week at a weekly rate of 10%. You'll obviously owe $220 at the end of a week. If you are unable to repay the loan, however, the lender will say that you now owe not only $220 but also 10% of that $220 at the end of the second week. Under this scenario, it turns out that after n weeks of not repaying anything you would owe 200 × 1.1n dollars.

Use this formula to determine how much you would owe after 12 weeks. (Round to the nearest cent.) $

What total percent interest are you being charged on your 12-week loan? (Round to the nearest percent.)

Answer 1

1.
Use this formula to determine how much you would owe after 12 weeks
=200*1.1*12
=2640.00

2.
What total percent interest are you being charged on your 12-week loan?
=200*1.1*12/200-1
=1220.00%